By Leigh Jackson
Top 5 Startup mistakes
As an Entrepreneur, building a startup can be an exhilarating, challenging and a difficult task. Many startups succeed but about 1 in 5 of them fail and only about one-third survive 10 years or more. What are the biggest reasons why startups fail? At the end of the day, it is not usually the startup that is failing; it is the entrepreneur that fails their startup. Here are some of the most common startup mistakes made by new entrepreneurs, ourselves included.
Startup mistake number 1 : Can’t see the Woods for the Trees.
Many startups don’t have a plan. Without a short/ long term plan with measurable goals and objectives, including dates and deadlines, your business will have a hard time succeeding. Startups without plans may not consider cash flow needs, growth, management, employees, inventory management all key factors in the success of a business. When you go through the exercise of planning, it forces you to address all of those areas. It also allows you to look objectively at the startup and determine if the case is compelling enough that someone would invest in it or infact if there is a market need in the first place. Lots of people have ideas. Some of them are good ideas and others might even be great ideas. However, an idea is only an idea until it is turned into a plan and executed effectively. Many businesses fail because of poor execution.
Startup mistake Number 2 – Nothing new to see here
This one is painful. – We have all been involved with startups that have suffered this one. Businesses need to deliver value and need to be better/different enough from their competitors that the customer will purchase or switch. It’s not enough to be just a little bit different. Research shows that a product needs to be at least 10x better, faster, cheaper, lighter…to truly stand out from the competition and give you the possibility of success. So, if your product/service is just a tiny bit better or a little bit different or doesn’t add value, you’re not going to give your business a chance for success.
“Many startups succeed but about 1 in 5 of them fail and only about one-third survive 10 years or more”
Startup mistake Number 3 – What no research ?? Pivot like Ross to succeed.
Lack of focus on customer research and testing and failure to adapt to information gained from said testing is not good for Startups. The most successful startups know exactly who their customer is. If you know exactly who your customer is, you can also define how big that target audience is and importantly, you can involve your customers in your product development so that your products are built based on feedback from those who will actually hand over their hard-earned cash for it. If you don’t know exactly who your customer is and can’t define that person in one sentence, your business is going to have a hard time. Your customers can be the one to keep you in business but can also be the one to put you out as well, so value them. Successful entrepreneurs test and pivot at every stage of the journey. Make an assumption yes, but test it and if your assumptions are disproved, you pivot. If they are proved, you move forward. A startup is a constant process of making adjustments and responding to changes. If you aren’t constantly scanning the environment and responding to it with assumptions, tests, and pivots, your company will either get left behind going the wrong direction or will make massive investments without knowing if you’re backing the right horse.
Startup mistake Number 4 – Running on Empty
While well known businesses like Airbnb, Pinterest and WeWork are extremely well known, that doesn’t mean they are profitable. What they have done successfully has caught the attention of investors and customers but they don’t actually make money. Most startups need sales and revenue and need to set profitability as a near-term target. The vast majority of small companies cannot survive if they don’t have steady and increasing sales that generate enough revenue to cover all costs and allow some left over to plow back into the business or distribute as profits to owners. By the way, companies that don’t keep an eye on expenses are similarly doomed. Companies can have loads of sales and revenues but if expenses are out of control, profits will be difficult to attain.
Startup mistake Number 5 – Don’t follow the Leader
Poor leadership is a key factor in many business failures. Leadership failures affect every aspect of your business, from sales to employee culture, so if you don’t have the appropriate skills to be an effective leader, figure out how to get them. Find a mentor. Network. Increase your business education. Develop a strong leadership team. Build an advisory board. Join Startup 2 Standup to get the support your startup deserves ( slipped that plug in nicely ).
You’re going to fail sometimes. With startups, expect it – it is normal but don’t think of it as failure but as growth. If you fear it, you may be too cautious and then you are more likely to fail. Failure is an excellent teacher so be a student of your failure and learn so you do it differently next time. Some of the most successful startups faced a disaster and the resulting pivot was the thing that pushed it into the right place.
And Don’t give up too early, Entrepreneurship should be considered a marathon, not a race. It is a long process, bumps along the way that requires endurance, self belief, creativity and patience. Some startups take off right away, but others take some extra time to gain traction. If you give up too early, you may be missing out on the one that takes just a little while longer and remember maybe the market just isn’t ready for someone as progressive as yourself at this given moment. It’s okay to shelve something for the time being and revisit down the line when the time is right.
Now that you know all of our startup mistakes, you’re on your way to success. Don’t be afraid to try and remember, you can pivot whenever you need to as many times as you need and failure only increases your chances of success the next time around.